|                                                                |                            |
|---------------------------------------------------------------------|---------------------------------|
| Delaware                                                            | 87-0502701                      |
| (State      or other jurisdiction of incorporation or organization) | (I.R.S.      Employer I.D. No.) |
|                                                                |                            |
|                                                                |                            |
| 8      Corporate Park, Suite 300, Irvine, California           | 92606                           |
| (Address      of principal executive offices)                       | (Zip      Code)                 |

|                     |                                           |
|--------------------------|------------------------------------------------|
| Title      of each class | Name      of each exchange on which registered |
| None                     | N/A                                            |

----

| PART      I- FINANCIAL INFORMATION                                                                      |   |
|---------------------------------------------------------------------------------------------------------|--------|
|                                                                                                    |   |
| ITEM      1. FINANCIAL STATEMENTS                                                                       | 3      |
| ITEM      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS      OF OPERATIONS | 20     |
| ITEM      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET    RISK                              | 21     |
| ITEM      4. CONTROLS AND PROCEDURES                                                                    | 22     |
| ITEM      4T. CONTROLS AND PROCEDURES                                                                   | 22     |
|                                                                                                    |   |
| PART      II- OTHER INFORMATION                                                                         |   |
|                                                                                                    |   |
| ITEM      1. LEGAL PROCEEDINGS                                                                          | 22     |
| ITEM      1A. RISK FACTORS                                                                              | 22     |
| ITEM      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF    PROCEEDS                             | 22     |
| ITEM      3. DEFAULT UPON SENIOR SECURITIES                                                             | 22     |
| ITEM      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                        | 22     |
| ITEM      5. OTHER INFORMATION                                                                          | 22     |
| ITEM      6. EXHIBITS                                                                                   | 22     |
|                                                                                                    |   |
| SIGNATURES                                                                                              |   |

----

----

| CONTENTS                                                                                                                            | PAGE                                                                                                                                                                                                                |
|-------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                |                                                                                                                                                                                                                |
| FINANCIAL      STATEMENTS                                                                                                           |                                                                                                                                                                                                                |
|                                                                                                                                |                                                                                                                                                                                                                |
|       Consolidated      Balance Sheets                                                                |                                    5 |
|                                                                                                                                |                                                                                                                                                                                                                |
|       Consolidated      Statements of Operations                                                      | 7                                                                                                                                                                                                                   |
|                                                                                                                                |                                                                                                                                                                                                                |
|       Consolidated      Statement of Stockholders' Deficit and Other Comprehensive Income      (Loss) | 8                                                                                                                                                                                                                   |
|                                                                                                                                |                                                                                                                                                                                                                |
|       Consolidated      Statements of Cash Flows                                                      | 10                                                                                                                                                                                                                  |
|                                                                                                                                |                                                                                                                                                                                                                |
|       Notes      to Consolidated Financial Statements                                                 | 12      - 19                                                                                                                                                                                                        |

----

| LEXON      TECHNOLOGIES, INC. AND SUBSIDIARIES |
|------------------------------------------------|
| (A      Development Stage Company)             |
| Consolidated      Balance Sheets               |
| June      30, 2008 and December 31, 2007       |
| (Unaudited)                                    |
|                                           |

|                                             |   |               |   |   |                   |   |
|--------------------------------------------------|--------|--------------------|--------|--------|------------------------|--------|
|                                             |   |               |   |   |                   |   |
| ASSETS                                           |
|                                             |   |               |   |   |                   |   |
|                                             |   |               |   |   |                   |   |
|                                             |   | June      30, 2008 |   |   | December      31, 2007 |   |
|                                             |   |               |   |   |                   |   |
| CURRENT      ASSETS                              |   |               |   |   |                   |   |
| Cash      and cash equivalents (Note 2)          |   | $                  | 36     |   |                   | $      | 5,255 |   |
|                                             |   |               |   |   |                   |   |   |   |
| PROPERTY      AND EQUIPMENT, net (Notes 2 and 3) |   |               | 1,094  |   |                   |   | 1,176 |   |
|                                             |   |               |   |   |                   |   |   |   |
| OTHER      ASSETS                                |   |               |   |   |                   |   |   |   |
| Investments      (Note 4)                        |   |               | 93,141 |   |                   |   | 104,189 |   |
| Deposits      and other assets                   |   |               | 4,603  |   |                   |   | 5,609 |   |
| Total      Other Assets                          |   |               | 97,744 |   |                   |   | 109,798 |   |
|                                             |   |               |   |   |                   |   |   |   |
| TOTAL      ASSETS                                |   | $                  | 98,874 |   |                   | $      | 116,229 |   |

----

| LEXON      TECHNOLOGIES, INC. AND SUBSIDIARIES |
|------------------------------------------------|
| (A      Development Stage Company)             |
| Consolidated      Balance Sheets               |
| June      30, 2008 and December 31, 2007       |
| (Unaudited)                                    |
|                                           |

|                                                      |   |               |       |   |                   |   |
|-----------------------------------------------------------|--------|--------------------|------------|--------|------------------------|--------|
| LIABILITIES      AND STOCKHOLDERS' DEFICIT                |   |
|                                                      |   |               |       |   |                   |   |
|                                                      |   |               |       |   |                   |   |
|                                                      |   | June      30, 2008 |       |   | December      31, 2007 |   |
|                                                      |   |               |       |   |                   |   |
|                                                      |   |               |       |   |                   |   |
| CURRENT      LIABILITIES                                  |   |               |       |   |                   |   |
| Accounts      payable                                     |   | $                  | 479,385    |   |                   | $      | 535,433 |   |
| Due      to related parties (Note 5)                      |   |               | 382,780    |   |                   |   | 402,118 |   |
| Accrued      expenses (Note 6)                            |   |               | 835,829    |   |                   |   | 831,642 |   |
| Convertible      debentures (Note 11)                     |   |               | 86,960     |   |                   |   | 86,960 |   |
| Notes      payable (Note 7)                               |   |               | 190,702    |   |                   |   | 174,982 |   |
| Total      Current Liabilities                            |   |               | 1,975,656  |   |                   |   | 2,031,135 |   |
|                                                      |   |               |       |   |                   |   |   |   |
| CONTINGENT      LIABILITIES (Note 6)                      |   |               | 274,610    |   |                   |   | 274,610 |   |
|                                                      |   |               |       |   |                   |   |   |   |
| STOCKHOLDERS'      DEFICIT                                |   |               |       |   |                   |   |   |   |
| Common      stock, par value $0.001 per share;            |   |               |       |   |                   |   |   |   |
| 100,000,000      shares authorized;                       |   |               |       |   |                   |   |   |   |
|   34,183,778      shares issued and outstanding |   |               | 34,184     |   |                   |   | 34,184 |   |
| Additional      paid-in capital                           |   |               | 3,066,839  |   |                   |   | 3,066,839 |   |
| Accumulated      other comprehensive loss (Note 10)       |   |               | (38,390    | )      |                   |   | (115,308 | ) |
| Deficit      accumulated during the development stage     |   |               | (5,214,025 | )      |                   |   | (5,175,231 | ) |
| Total      Stockholders' Deficit                          |   |               | (2,151,392 | )      |                   |   | (2,189,516 | ) |
|                                                      |   |               |       |   |                   |   |   |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS' DEFICIT          |   | $                  | 98,874     |   |                   | $      | 116,229 |   |

----

| LEXON      TECHNOLOGIES, INC. AND SUBSIDIARIES                                     |
|------------------------------------------------------------------------------------|
| (A      Development Stage Company)                                                 |
| Consolidated      Statements of Operations                                         |
| For      the Three Months and the Six Months Ended June 30, 2008 and 2007      and |
| the      Period from Inception on July 18, 2001 through June 30,    2008           |
| (Unaudited)                                                                        |
|                                                                               |   |   |   |   |   |   |   |   |   |

|                                         |   |                            |       |   |                          |   |       |                  |   |   |       |   |   |                |       |
|----------------------------------------------|--------|---------------------------------|------------|--------|-------------------------------|--------|------------|-----------------------|--------|--------|------------|--------|--------|---------------------|------------|
|                                         |   |                            |       |   |                          |   |       |                  |   |   |       |   |   | From      Inception |       |
|                                         |   | For      the Three Months Ended |       |   | For      the Six Months Ended |   |       | on      July 18, 2001 |   |
|                                         |   | June      30,                   |       |   | June      30,                 |   |       | Through               |   |
|                                         |   | 2008                            |       |   | 2007                          |   |       | 2008                  |   |   | 2007       |   |   | June      30, 2008  |       |
|                                         |   |                            |       |   |                          |   |       |                  |   |   |       |   |   |                |       |
| REVENUES                                     |   | $                               | -          |   |                          | $      | -          |                  |   | $      | -          |   |   | $                   | -          |   |   | $ | 22,031 |   |
|                                         |   |                            |       |   |                          |   |       |                  |   |   |       |   |   |                |       |   |   |   |   |   |
| EXPENSES                                     |   |                            |       |   |                          |   |       |                  |   |   |       |   |   |                |       |   |   |   |   |   |
| Research      and development                |   |                            | -          |   |                          |   | -          |                  |   |   | -          |   |   |                | -          |   |   |   | 495,688 |   |
| Selling,      general and administrative     |   |                            | 11,785     |   |                          |   | (7,729     | )                     |   |   | 34,089     |   |   |                | 79,845     |   |   |   | 3,989,557 |   |
| Bad      debt expense                        |   |                            | -          |   |                          |   | -          |                  |   |   | -          |   |   |                | -          |   |   |   | 52,784 |   |
| Depreciation      and amortization           |   |                            | 252        |   |                          |   | 272        |                  |   |   | 518        |   |   |                | 501        |   |   |   | 101,817 |   |
| Total      Expenses                          |   |                            | 12,037     |   |                          |   | (7,457     | )                     |   |   | 34,607     |   |   |                | 80,346     |   |   |   | 4,639,846 |   |
|                                         |   |                            |       |   |                          |   |       |                  |   |   |       |   |   |                |       |   |   |   |   |   |
| INCOME      (LOSS) FROM OPERATIONS           |   |                            | (12,037    | )      |                          |   | 7,457      |                  |   |   | (34,607    | )      |   |                | (80,346    | ) |   |   | (4,617,815 | ) |
|                                         |   |                            |       |   |                          |   |       |                  |   |   |       |   |   |                |       |   |   |   |   |   |
| OTHER      INCOME (EXPENSES)                 |   |                            |       |   |                          |   |       |                  |   |   |       |   |   |                |       |   |   |   |   |   |
| Interest      income                         |   |                            | -          |   |                          |   | -          |                  |   |   | -          |   |   |                | -          |   |   |   | 40,543 |   |
| Other      income                            |   |                            | -          |   |                          |   | -          |                  |   |   | -          |   |   |                | -          |   |   |   | 6,000 |   |
| Gain      on sale of assets                  |   |                            | -          |   |                          |   | -          |                  |   |   | -          |   |   |                | -          |   |   |   | 1,296,367 |   |
| Gain      on debt cancellation (Note 6)      |   |                            | -          |   |                          |   | 888,000    |                  |   |   | -          |   |   |                | 888,000    |   |   |   | 907,872 |   |
| Interest      expense                        |   |                            | (2,093     | )      |                          |   | (2,093     | )                     |   |   | (4,187     | )      |   |                | (4,091     | ) |   |   | (780,869 | ) |
| Impairment      of goodwill                  |   |                            | -          |   |                          |   | -          |                  |   |   | -          |   |   |                | -          |   |   |   | (1,851,692 | ) |
| Loss      from investment                    |   |                            | -          |   |                          |   | -          |                  |   |   | -          |   |   |                | -          |   |   |   | (11,667 | ) |
| Loss      from discontinued operation        |   |                            | -          |   |                          |   | -          |                  |   |   | -          |   |   |                | -          |   |   |   | (202,764 | ) |
| Total      Other Income (Expenses)           |   |                            | (2,093     | )      |                          |   | 885,907    |                  |   |   | (4,187     | )      |   |                | 883,909    |   |   |   | (596,210 | ) |
|                                         |   |                            |       |   |                          |   |       |                  |   |   |       |   |   |                |       |   |   |   |   |   |
| NET      INCOME (LOSS)                       |   | $                               | (14,130    | )      |                          | $      | 893,364    |                  |   | $      | (38,794    | )      |   | $                   | 803,563    |   |   | $ | (5,214,025 | ) |
|                                         |   |                            |       |   |                          |   |       |                  |   |   |       |   |   |                |       |   |   |   |   |   |
| BASIC      EARNING (LOSS) PER SHARE (Note 1) |   | $                               | (0.001     | )      |                          | $      | 0.03       |                  |   | $      | (0.001     | )      |   | $                   | 0.02       |   |   |   |   |   |
|                                         |   |                            |       |   |                          |   |       |                  |   |   |       |   |   |                |       |   |   |   |   |   |
| WEIGHTED      AVERAGE NUMBER OF              |   |                            |       |   |                          |   |       |                  |   |   |       |   |   |                |       |   |   |   |   |   |
| COMMON      STOCKS OUTSTANDING               |   |                            | 34,183,778 |   |                          |   | 34,183,778 |                  |   |   | 34,183,778 |   |   |                | 34,183,778 |   |   |   |   |   |

----

| LEXON      TECHNOLOGIES, INC. AND SUBSIDIARIES                                                  |
|-------------------------------------------------------------------------------------------------|
| (A      Development Stage Company)                                                              |
| Consolidated      Statements of Stockholders' Equity and Other Comprehensive Income      (Loss) |
| the      Period from Inception on July 18, 2001 through June 30,    2008                        |
| (Unaudited)                                                                                     |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   | Deficit         |   |   |   |   |
|-------------------------------------------|--------|-------------------|------------|--------|---------|--------|--------|--------------|--------|--------|---------------|--------|--------|--------------------|----------|--------|-----------------|--------|--------|--------|--------|
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   | Accumulated        |     |   | Accumulated     |   |   |
|                                      |   |              |       |   |    |   |   | Additional   |   |   |          |   |   | Other              |     |   | During      the |   |   |   |   |
|                                      |   | Common      Stock |       |   | Paid-in |   |   | Subscription |   |   | Comprehensive |   |   | Development        |     |   |
|                                      |   | Shares            |       |   | Amount  |   |   | Capital      |   |   | Receivable    |   |   | Income      (Loss) |     |   | Stage           |   |   | Total  |   |
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |
| Balance,      July 18, 2001               |   |              | -          |   |    | $      | -      |         |   | $      | -             |   |   | $                  | -        |   |            | $      | -      |   |   | $ | - |   |   | $ | - |   |
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |   |   |   |
| July      2001 - stock issued for         |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |   |   |   |
| provided      by operating activities     |   |              | 13,720,000 |   |    |   | 13,720 |         |   |   | -             |   |   |               | -        |   |            |   | -      |   |   |   | - |   |   |   | 13,720 |   |
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |   |   |   |
| August      2001 - stock issued for       |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |
| cash      at $0.25 per share              |   |              | 2,280,000  |   |    |   | 2,280  |         |   |   | 567,720       |   |   |               | (220,000 | )      |            |   | -      |   |   |   | - |   |   |   | 350,000 |   |
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |   |   |   |
| October      2001 - stock issued for      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |
| technology      at $0.25 pr share         |   |              | 1,500,000  |   |    |   | 1,500  |         |   |   | 373,500       |   |   |               | -        |   |            |   | -      |   |   |   | - |   |   |   | 375,000 |   |
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss for the period ended        |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |
| December      31, 2001                    |   |              | -          |   |    |   | -      |         |   |   | -             |   |   |               | -        |   |            |   | -      |   |   |   | (522,180 | ) |   |   | (522,180 | ) |
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2001           |   |              | 17,500,000 |   |    |   | 17,500 |         |   |   | 941,220       |   |   |               | (220,000 | )      |            |   | -      |   |   |   | (522,180 | ) |   |   | 216,540 |   |
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Receipt      of subscription receivable   |   |              | -          |   |    |   | -      |         |   |   | -             |   |   |               | 220,000  |   |            |   | -      |   |   |   | - |   |   |   | 220,000 |   |
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |   |   |   |
| April      2002 - stock issued to acquire |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |
| Phacon      Corporation (Note 1)          |   |              | 1,648,778  |   |    |   | 1,649  |         |   |   | (641,346      | )      |   |               | -        |   |            |   | -      |   |   |   | - |   |   |   | (639,697 | ) |
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |   |   |   |
| September      2002 - stock issued for    |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |
| cash      at $0.25 per share              |   |              | 280,000    |   |    |   | 280    |         |   |   | 69,720        |   |   |               | -        |   |            |   | -      |   |   |   | - |   |   |   | 70,000 |   |
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |   |   |   |
| December      2002 - stock issued for     |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |
| cash      at $0.83 per share              |   |              | 120,000    |   |    |   | 120    |         |   |   | 99,880        |   |   |               | -        |   |            |   | -      |   |   |   | - |   |   |   | 100,000 |   |
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss for the period ended        |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |
| December      31, 2002                    |   |              | -          |   |    |   | -      |         |   |   | -             |   |   |               | -        |   |            |   | -      |   |   |   | (473,510 | ) |   |   | (473,510 | ) |
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2002           |   |              | 19,548,778 |   |    |   | 19,549 |         |   |   | 469,474       |   |   |               | -        |   |            |   | -      |   |   |   | (995,690 | ) |   |   | (506,667 | ) |
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |   |   |   |
| January      2003 - stock issued for      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |
| cash      at $0.83 per share              |   |              | 240,000    |   |    |   | 240    |         |   |   | 199,760       |   |   |               | -        |   |            |   | -      |   |   |   | - |   |   |   | 200,000 |   |
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |   |   |   |
| March      2003 - stock issued for        |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |
| cash      at $0.25 per share              |   |              | 840,000    |   |    |   | 840    |         |   |   | 209,160       |   |   |               | -        |   |            |   | -      |   |   |   | - |   |   |   | 210,000 |   |
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |   |   |   |
| December      2003 - stock issued for     |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |
| cash      at $0.25 per share              |   |              | 60,000     |   |    |   | 60     |         |   |   | 14,940        |   |   |               | -        |   |            |   | -      |   |   |   | - |   |   |   | 15,000 |   |
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Foreign      currency translation         |   |              | -          |   |    |   | -      |         |   |   | -             |   |   |               | -        |   |            |   | 4,729  |   |   |   | - |   |   |   | 4,729 |   |
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss for the period ended        |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |
| December      31, 2003                    |   |              | -          |   |    |   | -      |         |   |   | -             |   |   |               | -        |   |            |   | -      |   |   |   | (611,808 | ) |   |   | (611,808 | ) |
|                                      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |     |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2003           |   |              | 20,688,778 |   |    | $      | 20,689 |         |   | $      | 893,334       |   |   | $                  | -        |   |            | $      | 4,729  |   |   | $ | (1,607,498 | ) |   | $ | (688,746 | ) |

| (Continued) |
|-------------|

----

| LEXON      TECHNOLOGIES, INC. AND SUBSIDIARIES                                                  |
|-------------------------------------------------------------------------------------------------|
| (A      Development Stage Company)                                                              |
| Consolidated      Statements of Stockholders' Equity and Other Comprehensive Income      (Loss) |
| the      Period from Inception on July 18, 2001 through June 30,    2008                        |
| (Unaudited)                                                                                     |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   | Deficit         |   |     |   |   |
|---------------------------------------|--------|-------------------|------------|--------|---------|--------|--------|--------------|--------|--------|---------------|--------|--------|--------------------|--------|--------|-----------------|--------|----------|--------|--------|
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   | Accumulated        |   |   | Accumulated     |   |     |   |   |
|                                  |   |              |       |   |    |   |   | Additional   |   |   |          |   |   | Other              |   |   | During      the |   |     |   |   |
|                                  |   | Common      Stock |       |   | Paid-in |   |   | Subscription |   |   | Comprehensive |   |   | Development        |   |   |            |   |
|                                  |   | Shares            |       |   | Amount  |   |   | Capital      |   |   | Receivable    |   |   | Income      (Loss) |   |   | Stage           |   |     | Total  |   |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |
| Balance,      December 31, 2003       |   |              | 20,688,778 |   |    | $      | 20,689 |         |   | $      | 893,334       |   |   | $                  | -      |   |            | $      | 4,729    |   |   | $ | (1,607,498 | ) |   | $ | (688,746 | ) |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| October      2004 - stock issued for  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |
| cash      at $0.25 per share          |   |              | 4,000,000  |   |    |   | 4,000  |         |   |   | 996,000       |   |   |               | -      |   |            |   | -        |   |   |   | - |   |   |   | 1,000,000 |   |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| December      2004 - stock issued for |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |
| cash      at $0.11 per share          |   |              | 6,125,000  |   |    |   | 6,125  |         |   |   | 693,875       |   |   |               | -      |   |            |   | -        |   |   |   | - |   |   |   | 700,000 |   |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| December      2004 - stock issued for |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |
| services      at $0.25 pr share       |   |              | 1,000,000  |   |    |   | 1,000  |         |   |   | 249,000       |   |   |               | -      |   |            |   | -        |   |   |   | - |   |   |   | 250,000 |   |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| December      2004 - stock issued     |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |
| in      lieu of outstanding debt      |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| at      $0.10 per share               |   |              | 2,370,000  |   |    |   | 2,370  |         |   |   | 234,630       |   |   |               | -      |   |            |   | -        |   |   |   | - |   |   |   | 237,000 |   |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| Foreign      currency translation     |   |              | -          |   |    |   | -      |         |   |   | -             |   |   |               | -      |   |            |   | 1,589    |   |   |   | - |   |   |   | 1,589 |   |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| Net      loss for the period ended    |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |
| December      31, 2004                |   |              | -          |   |    |   | -      |         |   |   | -             |   |   |               | -      |   |            |   | -        |   |   |   | (907,200 | ) |   |   | (907,200 | ) |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2004       |   |              | 34,183,778 |   |    |   | 34,184 |         |   |   | 3,066,839     |   |   |               | -      |   |            |   | 6,318    |   |   |   | (2,514,698 | ) |   |   | 592,643 |   |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| Foreign      currency translation     |   |              | -          |   |    |   | -      |         |   |   | -             |   |   |               | -      |   |            |   | (82,678  | )      |   |   | - |   |   |   | (82,678 | ) |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| Net      loss for the period ended    |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |
| December      31, 2005                |   |              | -          |   |    |   | -      |         |   |   | -             |   |   |               | -      |   |            |   | -        |   |   |   | (448,271 | ) |   |   | (448,271 | ) |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2005       |   |              | 34,183,778 |   |    |   | 34,184 |         |   |   | 3,066,839     |   |   |               | -      |   |            |   | (76,360  | )      |   |   | (2,962,969 | ) |   |   | 61,694 |   |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| Foreign      currency translation     |   |              | -          |   |    |   | -      |         |   |   | -             |   |   |               | -      |   |            |   | (20,773  | )      |   |   | - |   |   |   | (20,773 | ) |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| Investment      loss                  |   |              | -          |   |    |   | -      |         |   |   | -             |   |   |               | -      |   |            |   | (22,704  | )      |   |   | - |   |   |   | (22,704 | ) |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| Net      loss for the period ended    |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |
| December      31, 2006                |   |              | -          |   |    |   | -      |         |   |   | -             |   |   |               | -      |   |            |   | -        |   |   |   | (2,961,601 | ) |   |   | (2,961,601 | ) |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2006       |   |              | 34,183,778 |   |    |   | 34,184 |         |   |   | 3,066,839     |   |   |               | -      |   |            |   | (119,837 | )      |   |   | (5,924,570 | ) |   |   | (2,943,384 | ) |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| Foreign      currency translation     |   |              | -          |   |    |   | -      |         |   |   | -             |   |   |               | -      |   |            |   | 4,529    |   |   |   | - |   |   |   | 4,529 |   |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| Net      income for the period ended  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |
| December      31, 2007                |   |              | -          |   |    |   | -      |         |   |   | -             |   |   |               | -      |   |            |   | -        |   |   |   | 749,339 |   |   |   | 749,339 |   |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2007       |   |              | 34,183,778 |   |    |   | 34,184 |         |   |   | 3,066,839     |   |   |               | -      |   |            |   | (115,308 | )      |   |   | (5,175,231 | ) |   |   | (2,189,516 | ) |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| Foreign      currency translation     |   |              | -          |   |    |   | -      |         |   |   | -             |   |   |               | -      |   |            |   | 76,918   |   |   |   | - |   |   |   | 76,918 |   |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| Net      loss for the period ended    |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |
| June      30, 2008                    |   |              | -          |   |    |   | -      |         |   |   | -             |   |   |               | -      |   |            |   | -        |   |   |   | (38,794 | ) |   |   | (38,794 | ) |
|                                  |   |              |       |   |    |   |   |         |   |   |          |   |   |               |   |   |            |   |     |   |   |   |   |   |   |   |   |   |
| Balance,      June 30, 2008           |   |              | 34,183,778 |   |    | $      | 34,184 |         |   | $      | 3,066,839     |   |   | $                  | -      |   |            | $      | (38,390  | )      |   | $ | (5,214,025 | ) |   | $ | (2,151,392 | ) |

----

| LEXON      TECHNOLOGIES, INC. AND SUBSIDIARIES                           |
|--------------------------------------------------------------------------|
| (A      Development Stage Company)                                       |
| Consolidated      Statements of Cash Flows                               |
| For      the Six Months Ended June 30, 2008 and 2007 and                 |
| the      Period from Inception on July 18, 2001 through June 30,    2008 |
| (Unaudited)                                                              |
|                                                                     |   |   |   |   |   |

|   |   |                          |   |   |          |   |   | From      Inception   |   |
|--------|--------|-------------------------------|--------|--------|---------------|--------|--------|-----------------------|--------|
|   |   |                          |   |   |          |   |   | on      July 18, 2001 |   |
|   |   | For      the Six Months Ended |   |   | Through       |   |
|   |   | June      30,                 |   |   | June      30, |   |
|   |   | 2008                          |   |   | 2007          |   |   | 2008                  |   |

| CASH      FLOWS FROM OPERATIONG ACTIVITIES:                 |   |   |     |   |   |   |     |   |   |
|-------------------------------------------------------------|--------|--------|----------|--------|--------|--------|----------|--------|--------|
| Net      income (loss)                                      |   | $      | (38,794  | )      |   | $      | 803,563  |   |   | $ | (5,214,025 | ) |
| Adjustments      to reconcile net income (loss) to net cash |   |   |     |   |   |   |     |   |   |
| used      in operating activities                           |   |   |     |   |   |   |     |   |   |   |   |   |
| Depreciation      and amortization                          |   |   | 266      |   |   |   | 501      |   |   |   | 100,856 |   |
| Stock      for services                                     |   |   | -        |   |   |   | -        |   |   |   | 263,720 |   |
| Stock      for technology                                   |   |   | -        |   |   |   | -        |   |   |   | 375,000 |   |
| Bad      debt expense                                       |   |   | -        |   |   |   | -        |   |   |   | 52,784 |   |
| Impairment      of goodwill                                 |   |   | -        |   |   |   | -        |   |   |   | 1,845,124 |   |
| Gain      on forgiveness of debt                            |   |   | -        |   |   |   | -        |   |   |   | (19,872 | ) |
| Gain      on sale of assets                                 |   |   | -        |   |   |   | -        |   |   |   | (1,297,501 | ) |
| Change      in assets and liabilities (net of acquisition): |   |   |     |   |   |   | -        |   |   |   |   |   |
| Increase      in other assets                               |   |   | -        |   |   |   | -        |   |   |   | (18,219 | ) |
| Decrease      in other receivable                           |   |   | -        |   |   |   | -        |   |   |   | 359,992 |   |
| Decrease      in prepaid expenses                           |   |   | -        |   |   |   | -        |   |   |   | 4,684 |   |
| Increase      in accrued interest                           |   |   | -        |   |   |   | -        |   |   |   | (76,360 | ) |
| Decrease      in inventory                                  |   |   | -        |   |   |   | -        |   |   |   | 5,255 |   |
| (Decrease)      increase in accounts payable                |   |   | (75,386  | )      |   |   | (25,019  | )      |   |   | 216,784 |   |
| (Decrease)      increase in accrued expenses                |   |   | 4,187    |   |   |   | (857,907 | )      |   |   | 1,643,624 |   |
| Net      Cash Used in Operating Activities                  |   |   | (109,727 | )      |   |   | (78,862  | )      |   |   | (1,758,154 | ) |
|                                                        |   |   |     |   |   |   |     |   |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                  |   |   |     |   |   |   |     |   |   |   |   |   |
| Acquisition      of property and equipment                  |   |   | -        |   |   |   | (1,460   | )      |   |   | (4,576 | ) |
| Proceeds      received on sale of fixed assets              |   |   | 41       |   |   |   | -        |   |   |   | 119,507 |   |
| Payments      made on related party notes                   |   |   | -        |   |   |   | -        |   |   |   | (235,554 | ) |
| Proceeds      received on related party notes               |   |   | -        |   |   |   | -        |   |   |   | 477,407 |   |
| Acquisition      of investments                             |   |   | -        |   |   |   | -        |   |   |   | (1,869,371 | ) |
| Proceeds      from return of investments                    |   |   | -        |   |   |   | -        |   |   |   | 271,939 |   |
| Net      Cash Provided by (Used in) Investing Activities    |   |   | 41       |   |   |   | (1,460   | )      |   |   | (1,240,648 | ) |
|                                                        |   |   |     |   |   |   |     |   |   |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                  |   |   |     |   |   |   |     |   |   |   |   |   |
| Receipt      of subscription receivable                     |   |   | -        |   |   |   | -        |   |   |   | 220,000 |   |
| Proceeds      from related party notes                      |   |   | -        |   |   |   | -        |   |   |   | 239,731 |   |
| Proceeds      from notes payable                            |   |   | 15,720   |   |   |   | 149,982  |   |   |   | 314,277 |   |
| Payments      made on notes payable                         |   |   | -        |   |   |   | (41,615  | )      |   |   | (493,822 | ) |
| Proceeds      from issuance of common stock                 |   |   | -        |   |   |   | -        |   |   |   | 2,645,000 |   |
| Net      Cash Provided by Financing Activities              |   |   | 15,720   |   |   |   | 108,367  |   |   |   | 2,925,186 |   |
|                                                        |   |   |     |   |   |   |     |   |   |   |   |   |
| NET      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   |   |   | (93,966  | )      |   |   | 28,045   |   |   |   | (73,616 | ) |
|                                                        |   |   |     |   |   |   |     |   |   |   |   |   |
| EFFECT      OF CURRENCY EXCHANGE RATE CHANGES               |   |   |     |   |   |   |     |   |   |
| ON      CASH AND CASH EQUIVALENTS                           |   |   | 88,747   |   |   |   | (6,735   | )      |   |   | 73,652 |   |
|                                                        |   |   |     |   |   |   |     |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD       |   |   | 5,255    |   |   |   | 227      |   |   |   | - |   |
|                                                        |   |   |     |   |   |   |     |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS AT END OF PERIOD             |   | $      | 36       |   |   | $      | 21,537   |   |   | $ | 36 |   |

----

| LEXON      TECHNOLOGIES, INC. AND SUBSIDIARIES                           |
|--------------------------------------------------------------------------|
| (A      Development Stage Company)                                       |
| Consolidated      Statements of Cash Flows                               |
| For      the Six Months Ended June 30, 2008 and 2007 and                 |
| the      Period from Inception on July 18, 2001 through June 30,    2008 |
| (Unaudited)                                                              |
|                                                                     |   |   |   |   |   |

|   |   |                          |   |   |          |   |   |                  |   |
|--------|--------|-------------------------------|--------|--------|---------------|--------|--------|-----------------------|--------|
|   |   |                          |   |   |          |   |   | From      Inception   |   |
|   |   |                          |   |   |          |   |   | on      July 18, 2001 |   |
|   |   | For      the Six Months Ended |   |   | Through       |   |
|   |   | June      30,                 |   |   | June      30, |   |
|   |   | 2008                          |   |   | 2007          |   |   | 2008                  |   |

|                                             |   |
|--------------------------------------------------|--------|
|                                             |   |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL      CASH FLOW INFORMATION          |   |   |   |   |   |   |   |   |   |
|                                             |   |   |   |   |   |   |   |   |   |
| Cash      Payments For:                          |   |   |   |   |   |   |   |   |   |
| Interest                                         |   | $ | - |   |   | $ | - |   |   | $ | 717,548 |   |
|                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-Cash      Investing and Financing Activities |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      issued for thechnology                |   | $ | - |   |   | $ | - |   |   | $ | 375,000 |   |
| Stock      issued for services                   |   | $ | - |   |   | $ | - |   |   | $ | 263,720 |   |
| Stock      issued for in lieu of debt            |   | $ | - |   |   | $ | - |   |   | $ | 237,000 |   |

----

----

|           (a)  | Description      of Business |
|-----------------------------------------|------------------------------|

----

----

|           (b)  | Going      Concern |
|-----------------------------------------|--------------------|

| (a) | Basis      of Financial StatementPresentation |
|-----|-----------------------------------------------|

| (b) | Basis of      Consolidation |
|-----|-----------------------------|

----

----

| (c) | Unit      of Estimates |
|-----|------------------------|

| (d) | Revenue      Recognition |
|-----|--------------------------|

| (e) | Foreign      Currency Translation |
|-----|-----------------------------------|

| (f) | Cash and      Cash      Equivalents |
|-----|-------------------------------------|

| (g) | Properties      and Equipment |
|-----|-------------------------------|

----

----

| Buildings      and improvements | 20-40      years |
|---------------------------------|------------------|
| Machinery      and equipment    | 10      years    |
| Computer      equipment         | 3      years     |
| Automobiles                     | 5      years     |
| Office      and other equipment | 5      years     |

| (h)  | Investments |
|-----------|-------------|

| (j)  | Intangible      Assets |
|-----------|------------------------|

| (k)  | Basic      Earning (Loss) Per Share |
|-----------|-------------------------------------|

|                                                                   |   | 2008   |       |   | 2007   |   |
|------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                                   |   |   |       |   |   |   |
| Numerator      – net income (loss) for the period           |   | $      | (38,794    | )      |   | $      | 803,563 |   |
|                                                                   |   |   |       |   |   |   |   |   |
| Denominator      – weighted average number of shares outstanding |   |   | 34,183,778 |   |   |   | 34,183,778 |   |
|                                                                   |   |   |       |   |   |   |   |   |
| Earning      (loss) per share                                          |   | $      | (0.001     | )      |   | $      | 0.02 |   |

----

----

| (l)  | Financial    Instruments |
|-----------|--------------------------|

| (m)  | Recent Accounting  Pronouncements |
|-----------|-----------------------------------|

In June 2006, the FASB issued Interpretation No. 48,Accounting for Uncertainty in Income Taxes (“FIN 48”). FIN 48 clarifies theaccounting for uncertainty in income taxes recognized in the Company’s financialstatements in accordance with SFAS No. 109. FIN 48 prescribes a recognitionthreshold and measurement attributes for the financial statement recognition andmeasurement of a tax position taken or expected to be taken in a tax return. Theprovisions of FIN 48 are effective for the fiscal years beginning afterDecember 15, 2006. The adoption of FIN 48 did not have a significant effecton the Company’s financial statements.

Note 3 - Property and Equipment

|                            |   | June      30, 2008 |    |   | December      31, 2007 |   |
|---------------------------------|--------|--------------------|---------|--------|------------------------|--------|
|                            |   |               |    |   |                   |   |
| Computer      and equipment     |   | $                  | 10,450  |   |                   | $      | 10,450 |   |
| Furniture      and fixture      |   |               | 4,287   |   |                   |   | 4,287 |   |
|                            |   |               | 14,737  |   |                   |   | 14,737 |   |
| Accumulated      depreciation   |   |               | (13,643 | )      |                   |   | (13,561 | ) |
|                            |   |               |    |   |                   |   |   |   |
| Net      property and equipment |   | $                  | 1,094   |   |                   | $      | 1,176 |   |

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$402,118, respectively. These amounts arenon-interest bearing and payable on demand.

The Company has not been able to paycompensations to its officers on time, and the past-duecompensations aggregating $1,690,014, of which $888,000 was waived by theformer officers. As a result, the balance of the past-due compensations wasreduced to $802,014 as of June 30, 2008. The Company recorded the waived amountas gain on debt cancellation for the year ended December 31,2007.

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|                                                                                                                       |   | June      30, 2008 |    |   | December      31, 2007 |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|--------------------|---------|--------|------------------------|--------|
|                                                                                                                       |   |               |    |   |                   |   |
| Note      payable to a related party with interest at 7.5% per annum, unsecured.      Note is in default and due on demand |   | $                  | 20,000  |   |                   | $      | 20,000 |   |
|                                                                                                                       |   |               |    |   |                   |   |   |   |
| Note      payable to an individual with interest at 7.5% per annum, unsecured. Note      is in default and due on demand   |   |               | 5,000   |   |                   |   | 5,000 |   |
|                                                                                                                       |   |               |    |   |                   |   |   |   |
| Note      payable to an unrelated party with interest at 7.5% per annum, unsecured.      Note is due on demand             |   |               | 149,982 |   |                   |   | 149,982 |   |
|                                                                                                                       |   |               |    |   |                   |   |   |   |
| Note      payable to an unrelated party, non-interest bearing and unsecured. Note is      due on demand                    |   |               | 15,720  |   |                   |   | - |   |
|                                                                                                                       |   |               |    |   |                   |   |   |   |
| Total      notes payable                                                                                                   |   | $                  | 190,702 |   |                   | $      | 174,982 |   |

Note 8 - Income Taxes

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|                                |   | June      30, 2008 |     |   | December      31, 2007 |   |
|-------------------------------------|--------|--------------------|----------|--------|------------------------|--------|
|                                |   |               |     |   |                   |   |
| Balance,      beginning of period   |   | $                  | (115,308 | )      |                   | $      | (119,837 | ) |
|                                |   |               |     |   |                   |   |   |   |
| Effect      of currency translation |   |               | 76,918   |   |                   |   | 4,529 |   |
|                                |   |               |     |   |                   |   |   |   |
| Balance,      end of period         |   | $                  | (38,390  | )      |                   | $      | (115,308 | ) |

Note 11 - Convertible Debentures

|                                                                                                                                                                       |   | June      30, 2008 |         |   | December      31, 2007 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------------|--------|------------------------|--------|
|                                                                                                                                                                       |   |               |         |   |                   |   |
| A      note with 7.5% interest, convertible to 30,000 shares of the Company’s      common stock, matured on September 9, 2004 with interest accrued at      $10,708. |   | $                  |  30,000 |   |                   | $      |  30,000 |   |
|                                                                                                                                                                       |   |               |         |   |                   |   |   |   |
| Two      notes with 7.5% interest, convertible to 227,840 shares of common stock,      matured on October 30, 2005 with interest accrued at    $14,987.                    |   |               | 56,960       |   |                   |   | 56,960 |   |
|                                                                                                                                                                       |   |               |         |   |                   |   |   |   |
| Total      convertible debentures                                                                                                                                          |   | $                  | 86,960       |   |                   | $      | 86,960 |   |

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|                      |   | Six      Months    |    |   | Six      Months    |   |     |       |   |
|---------------------------|--------|--------------------|---------|--------|--------------------|--------|----------|------------|--------|
|                      |   | Ended              |    |   | Ended              |   |     | Percentage |   |
|                      |   | June      30, 2008 |    |   | June      30, 2007 |   |     | Change     |   |
|                      |   | (Unaudited)        |    |   | (Unaudited)        |   |     |       |   |
| Revenue                   |   | $                  | -       |   |               | $      | -        |       |   | $ | - |   |
| Operating      expenses   |   |               | 34,607  |   |               |   | 80,346   |       |   |   | 56.9 | % |
| Net      (loss)           |   | $                  | (38,794 | )      |               | $      | (803,563 | )          |   | $ | 95.2 | % |
| Net      (loss) per share |   | $                  | (.001   | )      |               | $      | .02      |       |   | $ | 95 | % |

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK

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